The push to require more of big banks that participate in the Tarp program has begun in earnest.
House Oversight Committee Chairman Henry Waxman has written letters to the nine large banks that received $125 billion from the Treasury Department, demanding that they disclose their executive compensation.
The letters were sent to the chief executives of Bank of America, Wells Fargo, JPMorgan Chase, Merrill Lynch, Citigroup, Morgan Stanley, Goldman Sachs, Bank of New York Mellon and State Street Corp. asking for two years´ worth of information on the total and average compensation of employees in the banks along with specific projections for this year, including the estimated number of executives who would be paid more than $500,000. Rep. Waxman also demanded explanations for any changes in salaries and benefits, and a breakdown of the sums paid to the ten highest employees in each firm. He gave the banks a deadline of Nov. 10 to comply.
Rep. Waxman´s move is the latest in a series of steps lawmakers have taken to try to influence banks´ behavior since the Treasury injected $125 billion of public funds into the big nine. American Banker claims in an article today that more pressure is in store for them. Of note: Rep. Waxman´s choice of banks from which to demand compensation details seems based on size, not health.
"I question the appropriateness of depleting the capital that taxpayers just injected into the banks through the payment of billions of dollars in bonuses, especially after one of the financial industry's worst years on record," Rep. Waxman wrote in the letters (view his letter to Bank of America's Ken Lewis here).
Update:New York Attorney General Andrew Cuomo has written to the same nine banks asking them for details on their bonus payouts. He wants to know how plans have changed since the banks learned that they would receive capital injections from the government (view his letter to Citi here).